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BorgWarner Inc. (NYSE: BWA) pounding technical traders

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It’s time to take an in-depth technical look at BorgWarner Inc. (NYSE: BWA) . Our goal here today is to examine how the stock is behaving so we can use that examination as a lens through which to evaluate the stock as a possible investment opportunity.

Technical analysis is predicated on the idea that all important information is already interpolated by buyers and sellers of a security, so the only thing left to really interpret and predict the action is that behavior itself. For market timers, one of the most important tools we have at hand is the key indicators that show whether the stock is stretched in one direction or the other too much, too far, or too fast. In other words, is the stock overbought, oversold, or somewhere in the middle?

For that, we first turn to the RSI measure. The 14-day RSI is the standard flag-bearer for this type of analysis. Right now, for BorgWarner Inc., the measure stands at 58.72%. That shows where the stock is as far as the degree to which it is becoming overbought or oversold relative to its price history.

If we look at other overbought/oversold oscillators, we can get even more perspective. The stochastic measure is a good example. Right now, the stock over the past month of action shows a score of 78.00% on the 20-day fast stochastic.

In an even broader sense, NYSE: BWA has recently been showing trading action that suggests an overall bullish posture on the chart according to trend-related measures such as a major moving average. In this case, we are looking at the relative positions of the 50-day and 200-day simple moving averages. The implication, of course, is that money is generally treating this stock in a positive manner in terms of capital flows.

Next, we want to look at participation levels. Our conviction on a stock in terms of its technicals is almost entirely subject in the end to the type of volume of trade we see going on in the stock. Patterns of action gain meaning strictly through volume levels. In other words, you need plenty of people playing the game for the score to matter. At this point, relative volume measures have been weak, indicating lack of interest among traders, investors, and money managers for the stock over the past month. As it stands at present, the stock might find important action around key levels on the chart, which is something else we like to take a close look at.

One of the best ways to define key levels is through derivations built off of the Fibonacci series. This is widely used by professional firms in the market. The Fibonacci series is a set of numbers derived from adding the prior number to the next one: 0,1,1,2,3,5,8,13,21,34, etc. You will note that each number is the sum of the prior two numbers. The series has been found to exemplify the mathematics underlying many growth systems. The ratio of one number to the next in the series approaches 61.8% (or 38.2%, depending on which direction you move) as a limit. In markets, the key levels are often played at retracements defined by this ratio and its associated connections. In this case, the critical 38.2% level drawn off the 52-week high of $52.71 sits at $45.22. NYSE: BWA also has additional resistance above at the stocks 200-day simple moving average, which sits at $ 43.34.

So far, we have looked at oscillators, moving average trends, and participation levels. However, sometimes, there is information carried in simply the degree of movement in a stock. For example, over the past trading month, NYSE: BWA has made a move of +2.63. By comparison, over the trailing 100 days, the stock is outperforming the S&P 500 by 16.67, and its gotten there by action that has been more volatile on a day-to-day basis than most other stocks on the exchange.

Obviously, that tells us a ton about this name. To even drill down deeper into the movement, we can see that the stocks recent action has come on a historical volatility score of 13.96%. That number is derived from the standard deviation of returns of some hypothetical trader buying the stock at a given average price during the specified period. If we want to look at range of action in a simplistic sense, the best way is to use the average true range over the most common reference time period, so we are staying on the same page with the market. In this case, the 20-day ATR as a percentage of its 20-day moving average comes in at 1.65%.

We plan to update our take on this stock as its pattern of behavior progresses from here.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE

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Could investors throw in the towel on Melco Resorts & Entertainment Limited (MLCO)

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Melco Resorts & Entertainment Limited (MLCO) has been stirring up interest among traders, and the company’s financials and technicals may explain some of that focus. The stock is a player in the cannabis space, which puts it in a bit of a spotlight as well. All of these trends and figures deserve some scrutiny, so we thought it was a good idea to take a closer look at the stock today.

In a fast-growth market segment, such as anything even remotely related to the marijuana and cannabis space, the story is always about potential for robust top-line growth and strong flows of cash from principal operations. That means we need to focus on the balance sheet first and foremost, then turn our attention to sales data. Finally, we will take a look at the chart and get a sense of how this stock is being treated by investors and traders in recent action.

The company is currently sitting on 1.51B in cash and cash-equivalent securities at the present time. In a high-ROI market like the cannabis space, cash is king because it allows a company to deploy it with a high expected rate of return on that investment. And investors, in turn, are usually willing to pay up for access to that high rate of return.

Naturally, we also have to point out that the company is sitting on 3.86B in total standing liabilities right now. Any major growth in debt can handicap a company in the cannabis space because most of these companies already function in the high-risk quadrant of the portfolio template given their inherent legislative risk, and debt further distances that potential leap to institutional flows given the implicit additional risk of dilution that generally accompanies excessive debt.

So, how has the market been treating the stock? For that, we must turn to the technicals. As most traders know, the cannabis space has been a speculative darling, but volatility is particularly high in these stocks. Melco Resorts & Entertainment Limited (MLCO) has been no exception, with a beta of 2.15. With a market cap of 15.406B, shares most recently closed at 28.210. For some perspective, consider that it has traded as high as 30.49 over the past year, and as low as 18.78, but the stock’s current 50-day simple moving average is tracking right now at 27.79.

One of the reasons so many of these stocks have such wide swinging volatility is because the risks are large but so is the potential for huge growth given that most businesses in the cannabis-related space are in some way tethered to the upward growth potential of a new and emerging market. But another reason is that many are still trading with relative small outstanding cap tables. In this case, Melco Resorts & Entertainment Limited (MLCO) is pulling around 544.3M in outstanding shares.

Even so, liquidity is always important. At this point, the stock has a 3-month average for shares changing hands in a given session of 2.72M. If you’re curious about whether or not folks are becoming more or less focused on the name, consider that its most recent 10-day average trading volume stands at 2.96M by comparison.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE

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Are Investors Wary Of NetApp, Inc. (NTAP)?

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NetApp, Inc. (NTAP) has been stirring up interest among traders, and the company’s financials and technicals may explain some of that focus. The stock is a player in the cannabis space, which puts it in a bit of a spotlight as well. All of these trends and figures deserve some scrutiny, so we thought it was a good idea to take a closer look at the stock today.

In a fast-growth market segment, such as anything even remotely related to the marijuana and cannabis space, the story is always about potential for robust top-line growth and strong flows of cash from principal operations. That means we need to focus on the balance sheet first and foremost, then turn our attention to sales data. Finally, we will take a look at the chart and get a sense of how this stock is being treated by investors and traders in recent action.

The company is currently sitting on 5.63B in cash and cash-equivalent securities at the present time. In a high-ROI market like the cannabis space, cash is king because it allows a company to deploy it with a high expected rate of return on that investment. And investors, in turn, are usually willing to pay up for access to that high rate of return.

Naturally, we also have to point out that the company is sitting on 2.17B in total standing liabilities right now. Any major growth in debt can handicap a company in the cannabis space because most of these companies already function in the high-risk quadrant of the portfolio template given their inherent legislative risk, and debt further distances that potential leap to institutional flows given the implicit additional risk of dilution that generally accompanies excessive debt.

So, how has the market been treating the stock? For that, we must turn to the technicals. As most traders know, the cannabis space has been a speculative darling, but volatility is particularly high in these stocks. {{companyAbbr_1}} has been no exception, with a beta of 1.87. With a market cap of 16.322B, shares most recently closed at 59.16. For some perspective, consider that it has traded as high as 65.58 over the past year, and as low as 37.43, but the stock’s current 50-day simple moving average is tracking right now at 61.39.

One of the reasons so many of these stocks have such wide swinging volatility is because the risks are large but so is the potential for huge growth given that most businesses in the cannabis-related space are in some way tethered to the upward growth potential of a new and emerging market. But another reason is that many are still trading with relative small outstanding cap tables. In this case, NetApp, Inc is pulling around 267.92M in outstanding shares.

Even so, liquidity is always important. At this point, the stock has a 3-month average for shares changing hands in a given session of 3.24M. If you’re curious about whether or not folks are becoming more or less focused on the name, consider that its most recent 10-day average trading volume stands at 2.96M by comparison.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE

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Could investors throw in the towel on Lam Research Corporation (LRCX)

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Stock of Lam Research Corporation (LRCX) opened at $197.92 and last traded at $195.83 x 200. More than 1,966,106 shares exchanged hands compared to an average daily volume of 3,904,340 shares. At the current pps, the market capitalization stands at 32.283B.

Fundamentals you simply cannot ignore

Investors try to use stocks with high beta values to quickly recoup their investments after sharp market losses. Lam Research Corporation (LRCX) currently has a Beta value of 1.44 . Beta is a measurement of a stock’s price fluctuations, which is often called volatility and is used by investors to gauge how quickly a stock’s price will rise or fall. A stock with a beta of greater than 1.0 is riskier and has greater price fluctuations, while stocks with beta values of less than 1.0 are steadier and generally larger companies. Beta is often measured against the S&P; 500 index. An S&P; 500 stock with a beta of 2.0 produced a 20 percent increase in returns during a period of time when the S&P; 500 Index grew only 10 percent. This same measurement also means the stock would lose 20 percent when the market dropped by only 10 percent. Next, let’s take a look at Lam Research Corporation (LRCX) current P/E ratio. Lam Research Corporation (LRCX) currently has a PE ratio of 21.76. PE ratio is an important parameter to look at when trading a stock mostly because it is easy to calculate. There are a couple of ways to calculate PE ratio either by dividing share price by earnings per share or dividing the market cap by net income. It is important to note that the earnings are usually taken from the trailing twelve months (TTM). Nevertheless, P/E tells us how much an investor is willing to pay for $1 of a company’s earnings. The long-term average P/E is around 15, so on average, investors are willing to pay $15 for every dollar of earnings. Another useful way to look at this: Turn the P/E ratio around to look at the E/P ratio, which when expressed as a percentage gives us the earnings yield. For instance: 1/15 gives us an earnings yield of 6.67%.

While we have already looked at Lam Research Corporation (LRCX) beta and P/E ratio, the EPS cannot be ignored. Lam Research Corporation (LRCX) EPS for the trailing twelve months was 9.10. Traders and investors often use earnings per share (TTM) to determine a company’s profitability for the past year. So in essence, EPS is the amount of a company’s net income per share of common stock. Earnings per share equal the company’s net income less any dividends paid on preferred stock divided by the weighted average number of common stock shares outstanding during the year. Lam Research Corporation (LRCX) is estimated to release its next earnings report on 6 / 2018 (N/A-Not know at this time). It would be interesting to see how the earnings fair out considering the recent developments.

The Analyst Chirp:

Lam Research Corporation (LRCX) has received an average target price from analysts of $258.70 amounting to a recommendation rating of Buy. That comes from 22 different analysts. Perhaps, the driver for that assessment comes from the company’s valuations. Right now, we are looking at a median price-to-earnings ratio for this calendar year of 12.12. To give a sense of trend, the same data point on the estimate for next year is currently sitting at 12.43 times earnings. Drilling down a bit further, this quarter, we are looking at an average estimate from analysts for earnings per share level of 18.00. That shift to 18.00 heading into next quarter.

Other Stocks in same sector as Lam Research Corporation (LRCX):

Other notable stocks in similar sector as to Lam Research Corporation (LRCX) to consider are {{companyAbbrExt_1}}, {{companyAbbrExt_2}}, {{companyAbbrExt_3}} that last traded at ${{Bid_1}}, ${{Bid_2}}. ${{Bid_3}} respectively.

 

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE

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DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of argusjournal.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please click HERE